ASX falls 0.5 per cent as Hurricane QBE hits

Investors failed to build on the month’s positive early momentum on Tuesday, with a sharp fall in QBE Insurance dragging the ASX into the red.

A tumble in the oil price weighed on energy stocks, the worst performing sector of the market, and telecommunications and listed property were the only sectors which managed to scrape into the green.

The benchmark S&P/ASX 200 Index lost 27 points or 0.5 per cent to 5701, while he broader All Ordinaries Index dropped by a similar margin to 5764 points. The Australian dollar dipped below US78¢ for the first time since mid-July after the Reserve Bank of Australia held rates steady at 1.5 per cent – a widely expected decision. In late Tuesday trade the Aussie fetched US77.95¢.

QBE detailed that it expected a $US600 million hit to profits from recent hurricanes Harvey, Irma and Maria and an earthquake in Mexico, prompting investors to flee the beleaguered insurer. The stock dropped 3.5 per cent, bringing the losses this year to more than 20 per cent.

«We think there’s probably some more to go for QBE,» said Romano Sala Tenna, portfolio manager at Katana Asset Management.

«Some of the analysis on QBE in recent days has been farcically optimistic and because of its size, it’s a big wash on the overall market.»

The big four banks also weighed on the bourse, with Commonwealth Bank of Australia giving up all of Monday’s solid gains to end the session off 1.6 per cent. ANZ eased 0.1 per cent, Westpac shed 0.4 per cent and NAB lost 0.7 per cent.

Investors scooped the profits from local energy names after a particularly strong September performance. Woodside Petroleum, Australia’s largest oil producer, closed down 1 per cent, as did Santos. Origin Energy lost 0.8 per cent.

Beach Energy slumped 5.5 per cent as investors capitalised on the company’s recent run. Beach recently announced it plans to acquire Lattice Energy, a move institutional investors are pleased with.

Get the latest news and updates emailed straight to your inbox.

A strong US dollar has knocked the price of gold bullion down, prompting investors to sell off gold miners. Australia’s largest gold producer Newcrest Mining finished Tuesday down 1.3 per cent.

In other equities news, the a2 Milk company slumped 2.6 per cent after Deutsche Bank downgraded the stock to a hold rating, pointing to the dairy company’s ratings.

Stockwatch

TechnologyOne plunged 10 per cent to $4.55 after cutting its full-year profit growth guidance range to 7 per cent to 9 per cent for 2017, down from a previous range of between 10 per cent and 15 per cent. The software and services firm blamed the downgrade on a slower-than-expected return to profitability in the company’s consulting business. «We had expected that we could substantially overcome this shortfall but unfortunately a number of significant deals for which we are preferred and for which contracts have been negotiated have not been able to be closed by year end,» CEO Edward Chung said.

Movers

NZ confidence drop

New Zealand business confidence was hit by a turbulent election campaign in the third quarter with political uncertainty likely to drag on as politicians battled to form a government, according to a private think tank. A net 5 per cent of firms surveyed expected general business conditions to improve, the lowest since March 2016, compared with 18 per cent in the previous quarter, said the New Zealand Institute of Economic Research’s. The quarterly survey of business opinion was carried out during the tumultuous campaign in the lead-up to the hotly-contested vote on September 23, as investors and households held off from committing to any major plans.

Japan turns Turkey

Japan’s intrepid retail investors will forgive a lot when it comes to yield. It’s those 10 per cent-plus rates across the Turkish bond curve — among the highest in major emerging markets — that are luring Mr and Mrs Watanabe to the country’s assets. Starved for return by near-zero rates at home, individual investors have propelled a 27 per cent jump in Japanese mutual funds’ investments in lira-denominated bonds this year. At 50.8 billion yen through August, it’s poised to be the biggest annual increase since 2012, according to data from Japan’s Investment Trusts Association.

Ad woes

HT&E plunged 12 per cent to $1.80 on Tuesday, its lowest close since mid 2016, after saying its Adshel business lost an advertising contract from Yarra Trams. Adshel held the contract for the previous six years and HT&E sees its full-year EBITDA reduced by $15 million. It posted a statutory fiscal 2016 adjusted operating profit from continuing operations of $90.9 million. The sharp drop in the company’s share price extended a 37 per cent fall so far this year. It also said that it has been appointed as the preferred partner on a new seven-year outdoor advertising contract for Metro Trains Melbourne.

Qatar’s cash drive

Isolated by powerful Arab neighbours, Qatar’s sovereign wealth fund is reversing a decade-long run in high-profile foreign investments to buttress its own economy. The Qatar Investment Authority, which has reduced its direct holdings in Credit Suisse Group, Rosneft and Tiffany in recent months, is considering selling more of its $US320 billion of assets, which includes stakes in Glencore and Barclays, and channelling the proceeds into its home market, according to people familiar with the matter.